In Season 5 of Mad Men, a TV series set in the 1960’s, Peggy leaves the company to accept a salary of $19,000. What does $19K in 1967 equate to in today’s dollars? Let’s solve it with a spreadsheet!
What’s the game plan? Let’s first determine what the equivalence is of $1 in 1967 (which is when we believe Season 5 is set) to today’s dollars. Once we have that number, we can multiply it by $19k to get Peggy’s salary translated into current dollars.
Before we begin, let’s take a step back and discuss inflation. Inflation is an increase in the overall level of prices of an economy’s goods and services over time. If prices of goods and services rise, each dollar (or unit of currency) buys fewer items, which means that with inflation, the purchasing power of money falls.
Provided by the Bureau of Labor Statistics, the Consumer Price Index (CPI) is a measure of the average change in prices of a basket of goods and services bought by urban households. It selects a reference base (1982-1984) and sets that average index level as 100.
As seen in the embedded spreadsheet below, we can take the average CPI in 1967 and the most recent CPI. As both CPI measures are calculated off the same reference base, we can compare the two figures and take a ratio, which comes to 6.95. This ratio can be interpreted as the translation of $1 in 1967 terms to current dollars.
With this, we can now multiply the $6.95 to Peggy’s new salary level of $19,000, which leads us to an impressive figure of $132,070!
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